MOSCOW (MRC) -- Demand for low density polyethylene (LDPE) has been low since the beginning of the year, due to objective reasons in the Russian market in conditions of oversupply, and this factor is putting serious pressure on prices. Prices continued to decrease in February, but not as significant as in January, according to the ICIS-MRC Price Report.
LDPE market remained oversupplied significantly a serious surplus since January, and in the low season it puts additional negative pressure on demand and prices. Amid a great surplus, converters were trying to get the lowest possible prices for polyethylene (PE) from suppliers. Polyethylene fell in price most noticeably in January; in the last month of winter, the decline in prices continued, but not as significant as a month earlier.
The demand for LDPE in the spot was low in January due to the long New Year holidays. There were already no long holidays in February, but the volume of purchases from converters was still not large. Many converters replenished their stocks exclusively for current needs; in fact, no one built up additional stocks. Also, for the second month in a row, many large converters cover their needs for LDPE exclusively within the framework of annual contracts.
Buyers do not make purchases in the spot market.
Some sellers did not sell their January volumes of LDPE, and the balances were shipped this month, which creates even more pressure on the market. In conditions of low demand, some suppliers were trying to stimulate demand by reducing the price of polyethylene, but the volume of purchases from converters does not increase. Some sellers wre still hoping for the spring months.
From their point of view, demand for PE will grow under the pressure of seasonal factors. Scheduled maintenance works will begin at production facilities in Kazan and Belarus will start in April-May, which traditionally increased the demand for LDPE in previous years.
Last week, the prices of 158 LDPE at some sellers reached Rb145,000/tonne, including VAT, and delivery.
Polyethylene for the production of shrink films was offered from Rb154,000/tonne, including VAT, and delivery, and above.